GARMIN Corporate Analysis

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GARMIN Corporate Analysis Powered By Docstoc
					Corporate Analysis

Capstone Project
Presented by:
Team “B” - Synergy
     Scott, Irene, April, Simplicious
                                      Click section to jump throughout document
Executive Summary                                                                 1
Garmin Company Description                                                        2
Technological Innovations                                                         3
Marketing Strategy                                                                3
              Product                                                             3
                Price                                                             4
                Place                                                             5
             Promotion                                                            5
PEST Analysis                                                                     6
              Political                                                           6
              Economic                                                            7
                Social                                                            7
            Technological                                                         8
SWOT Analysis                                                                     9
              Strengths                                                           9
            Weaknesses                                                            9
           Opportunities                                                          9
               Threats                                                            9
Competitive Analysis                                                              10
           Target Markets                                                         10
          Market Segments                                                         10
         Porter’s Five Forces                                                     11
Financial Ratio Analysis                                                          13
Critical Success Factors                                                          14
Evaluation                                                                        14

          Income Statement                                                        A1
           Balance Sheet                                                          A2
             Cash Flow                                                            A3
          Other Financials                                                        A4

    Corporate Overview Sources                                                    S1

    Technological Innovations &
    Marketing Strategy Sources                                                    S1
       PEST Analysis Sources                                                      S1
       SWOT Analysis Sources                                                      S2
    Competitive Analysis Sources                                                  S3
   Critical Success Factors Sources                                               S3
Executive Summary

 Garmin was founded in 1990 by
  two electrical engineers, Gary
    Burrell and Dr. Min Kao.

   They are headquartered in
        Olathe, Kansas.

    Produces over 100 products in aviation, marine, outdoor, fitness, automatic, mobile,
     and OEM markets

    Continual focus on innovation by extending product lines, to include nüvifone

    Garmin is reliant upon satellite technology which is outside of their control

    Competition comes from TomTom, iPhone, Blackberry, L-3 Avionics System and
     Rockwell Collins

    Risk stems from new entrants in cell-phone GPS unit market and market saturation

    The use of GPS technology across all age groups is a significant opportunity, as well
     as possible strategic partnership with Google

    Garmin’s financial position is strong, although they have been impacted by the
     economic situation that has reduced their YoY revenue growth

    The company's stronger gross margins in the second quarter were helped by
     currency fluctuations, product mix, stable prices and raw material cost reductions.

    Garmin is betting on the nüvifone smartphone to boost its position in the hyper-
     competitive mobile market.

                                                          An Analysis of GARMIN – Team Synergy -- 1
Garmin Company Description

Creating navigation and communication devices that enrich their customer’s lives is what Garmin is all
about. One year after a brainstorming session around a card table with a small group of engineers, Garmin
launched its first product in 1990. The GPS 100, a panel-mounted receiver intended for the marine market,
debuted at the 1990 International Marine Technology Exposition in Chicago.1

Garmin’s next product was a handheld GPS receiver used by military personnel serving during the first Gulf
War in 1991. The company expanded industry application of these devices for the fitness and sports
industries next. One of their most popular product lines is the eTrek series of handheld GPS devices. The
eTrek product line continues today.2

Garmin’s focus on continual innovation, along with a desire to meet their loyal customer’s expectations, has
fueled an ever-growing list of products. Today, application of Garmin’s products span a wide range of
industries to include automotive, aviation, marine, fitness, outdoor recreation, and wireless. 3

The company designs, manufactures, markets, and sells its own products. Garmin employees are also
responsible for live-use testing of their products. This gives them a significant competitive advantage
because they live and breathe their solutions. Research and development is paramount to Garmin’s long-
term success. This enables Garmin to remain focused on continual improvement of their products.4

Garmin sells over 100 products and most recently announced the launch of a smartphone, the nüvifone,
which is intended to compete with smartphones on the market. 5


                                                                                       An Analysis of GARMIN – Team Synergy -- 2
Technological Innovations

Garmin pioneered the standalone portable navigation device market. The market for stand-alone GPS
devices is fast-growing and increasingly competitive as multi-capability devices, such as smartphones, are
gaining market share. GPS technology moved onto cell phones a few years ago and is a fast-growing feature
on the devices. Some 77 million GPS-equipped smartphones will ship worldwide in 2009, up 35% from last
year. (Garmin, 2008)

One of the key strategic initiatives of the company for its future growth is continuous innovation,
development, and introduction of new products. Garmin benefits greatly from the consistently expanding
aviation, marine and fitness segments. Product development for these segments accounts for nearly 30% of
Garmin's sales and approximately 45% of its operational earnings. (Kiley, 2009)

Garmin leverages its GPS expertise to deliver navigation devices for anything that moves. Garmin also
distinguishes itself from competitors through rapid research-and-development (R&D) cycles that deliver
product refreshes quickly.

Marketing Strategy

Garmin's primary marketing strategy is to "provide a quality product at an affordable price." The overarching
mission of this strategy is: “to enrich the lives of customers, suppliers, distributors, associates and
stockholders by designing, manufacturing and selling navigation and communication products that provide
superior quality, safety and operational features, lower cost of manufacturing and ownership, and sufficient
profits to support desired company growth.” (Garmin, 2007)


    Garmin designs, manufactures, markets and sells over 100 products worldwide for consumer, business
    and military applications. As customer demands have evolved - Garmin has launched new products.
    Their communication and navigation products serve the aviation, marine, outdoor, fitness, automotive,
    mobile and OEM markets.

    As the navigation component of its devices becomes more commoditized, Garmin is branching out into
    services and new devices such as the nüvifone to sustain its market share and competing with mobile
    phone manufacturers. The navigation is integrated into the nüvifone as a prominent feature rather than
    an after-thought.

             Garmin's focus on R&D ensures the latest features are brought to market quickly through
              product refreshes.
             Garmin is betting on the nüvifone to help it stay relevant as GPS functionality becomes
              pervasive on cell phones. This stride comes with significant execution risk in a competitive
             Adoption of GPS service by wireless carriers could cannibalize sales of Garmin's personal
              navigation devices.

                                                                        An Analysis of GARMIN – Team Synergy -- 3

    According to, Garmin produces seven of the top ten most popular GPS products. In
    2008, Garmin’s GPS products sold for an average of $467. Overall, the non-Garmin GPS products on the
    list had an average price of $307, priced 34% lower than Garmin GPS products. (Pricegrabber, 2008)

            Garmin ranked highest in a list of average price ranges for all GPS products by manufacturer:
                $500 average price range - Garmin
                $400 average price range - TomTom, Magellan, and Lowrance
                $200 average price range - Mio and ViaMichelin

    Another study performed by PriceGrabber in 2007, reported a continuing downward trend in GPS prices,
    despite new introductions of high-end products, like the Garmin Nüvi 660. The lower-end products and
    the introduction of value-oriented products introduce stiff competition around the $200 price range.

                                                                 *Pricing based on average monthly price of all GPS products

                Source: Market Reporter, 2007

    Despite this downward trend - Garmin continues to employ a niche product pricing strategy because the
    standalone GPS market is still considered a niche market. Garmin’s pricing is geared toward the higher-
    income consumer.

           Average sale prices for Garmin's navigation devices continue to fall as competition increases
            which adversely affects their market share.
           Garmin recently benefited from lower input costs affecting their ability to remain competitively
            priced. (Pricegrabber, 2008)

                                                                                      An Analysis of GARMIN – Team Synergy -- 4

   Garmin products are available in a variety of retail channels on three continents: North America, Europe
   and Asia. As consumer demand for GPS technology increases, especially in the automotive market,
   Garmin has opportunities to meet the needs of consumers in more key markets.

   Garmin also has relationships with many original equipment manufacturers. The consumer product
   distributors of the company include giants such as Chrysler/Mopar, Toyota, Harley-Davidson, BMW
   Motorrad, and Honda Motorcycle.

   In 2008, Stan Brajer, director of fitness sales and marketing for Garmin, announced that they wanted to
   focus more on specialty markets as part of their goal to win back independent bicycle dealers. (Norman,

           Garmin’s distribution network includes 3,000+ independent dealers and the largest electronics
           Garmin's consumer products are marketed through local distributors who resell to dealers.
           Garmin's distribution reach diminishes as retailers such as Circuit City close stores.


   Garmin utilizes an in-house advertising agency that handles all of the company's promotional and
   communication needs. In 2008, they also became an exclusive navigation supplier to Kenwood’s new
   2008 lineup of in-dash automotive electronics. Garmin aligned with Kenwood on print, radio and online
   advertising in addition to a dedicated internet site and point-of-purchase materials to inform customers.
   (Garmin, 2007)

           The company's focus is on increased consumer awareness of the Garmin name.
           Efforts include typical media placements (periodical ad space, billboard, radio)

                                                                     An Analysis of GARMIN – Team Synergy -- 5
PEST Analysis

GPS devices are rendered useless without a satellite system to support them. Global Navigation Satellite
System (GNSS) is the standard generic term for satellite navigation systems that provide autonomous geo-
spatial positioning with global coverage.1 Currently, the U.S. has the only operational GNSS in the world
referred to as the NAVSTAR Global Positioning System (GPS). The EU is currently working on the Galileo
project, expected to launch in 2013. Russia’s GLONASS and China’s Beidou are similar projects underway,
but neither will deploy until after 2013.

The European Union (EU) began to develop GNSS in order to have an independent system they can rely
upon in times of war or political disagreement. Presently, the U.S. and/or Russia could disable EU’s access to
GPS through encryption. The U.S. was successful in its request that the EU leverage a different frequency for
Galileo GPS, thereby ensuring any jamming of their GNSS system would not affect the US system.3

Until 2000, the U.S. had at their disposal a capability on the satellites called Selective Availability (SA), which
allowed them to render locations incorrectly on the GPS. The EU felt that civil infrastructure using the GPS
was vulnerable and, as a result, believed an independent system was needed. In 2000, President Clinton
disabled SA and committed that future satellites wouldn’t include the SA capability.4

China is currently the third largest export market for U.S. goods. China is part of the World Trade
Organization. Prior to their accession in 2001 to the WTO, China severely limited imports by imposing high
tariffs and taxes. China’s post-WTO accession tariff rates are “bound,” meaning that China cannot raise them
above the bound rates without “compensating” WTO trading partners. China’s most important revenue
source is the Value Added Tax, which ranges between 13 and 17 percent and continues to be uneven.
Importers from a wide range of sectors report that, because taxes on imported goods are reliably collected
at the border, they are sometimes subject to application of a VAT that their domestic competitors often fail
to pay. 5

EU countries, collectively, ranked second in the U.S. goods export market in 2007. Notwithstanding the
existence of customs laws that govern all EU Member States, the EU does not administer its laws through a
single customs administration. This makes uniform application of decisions impossible, thereby increasing
costs for appeals. The U.S has continued to raise serious concerns both bilaterally with the EU and in the
WTO ITA Committee in Geneva about a series of EU measures that have the effect of no longer providing or
guaranteeing duty free treatment for certain information technology products, to include smartphones with
GPS. The EU is applying new duties as high as 14 percent on imports of these products. 6

Canada is currently the largest export market for U.S. goods. If NAFTA (North American Free Trade
Agreement) expired, Garmin could face significant costs related to tariffs and taxes. 7

                                                                         An Analysis of GARMIN – Team Synergy -- 6

While economic pressures have severely affected consumer discretionary spending, shipments of GPS-
enabled cell phones will increase 6.4% from 2008. It is expected that nine out of every 10 smartphones will
contain GPS capability by 2014, as compared to one in three in 2008.8 Shipment of GPS handsets, though, is
expected to drop four to five percent in 2009. With the dollar weakening and Garmin manufacturing
overseas - they must endure the negative impact of losing money on the conversion. During the dollar’s
continuing decline, they might benefit greatly from a shift to manufacturing a portion of their products in
the U.S.

The current economic crisis will likely last through the end of 2010. Recent news, published by Bloomberg,
indicates the world’s largest economy (US) shrank at a .7% annual rate from April through June.9 Europe’s
economy contracted more than estimated in the second quarter as consumer spending was weaker than
earlier reported. 10 In late 2009, China announced an enormous fiscal stimulus package. Since then the
Shanghai Composite Index has rallied some 90 percent. Despite this fact, questions remain over their ability
to sustain over the longer-term as the stimulus goes away.11

Given the state of the economy, businesses around the world are concerned about the impact inflationary
pressures could have on their businesses. One consequence of selling into international markets is an
exposure to movements in currency exchange rates. Tax rates, such as repatriated earnings taxes, can have
a significant impact upon the company. In 2008, Taiwan increased these taxes to 19% from 12%, resulting in
a loss of .30c per share that year alone. 12

The state of several major economies, as of September 30, 2009:

          Country             Interest         Growth   Inflation   Jobless     Exchange
                                Rate             Rate      Rate      Rate         Rate
            U.S.                .25%            -3.8%     -1.5%      9.8%        77.0450

             EU                1.00%            4.8%     -.20%       9.6%         1.4732

           China               5.31%            7.9%     -1.2%       4.3%         6.8255


Telecom Times reports that by 2015, the expected number of GPS subscribers will reach 160 million, which
translates to a 33.7% compound annual growth rate. U.S. and Japan subscribers are opting for mobile
devices in large numbers, whereas the EU is seeing a more gradual replacement of personal navigation

More than 40 percent of all smartphone owners use their mobile devices to get turn-by-turn directions,
according to Compete, a web analytics firm. For iPhone users, that number is more than double. As these
phones enhance their GPS capabilities, it may continue to pressure personal navigation device makers. One
person interviewed recently, summed up the general sentiment of desiring one device when he said, “The
simplicity of having one device and not needing to pull the Garmin out of my glove compartment is enough.
I want to get into my car and do as few things as possible.” 14
                                                                     An Analysis of GARMIN – Team Synergy -- 7
The EU has implemented several environmental regulations in the past few years, one of which is the RoHS
(restriction of hazardous substances) Directive. This directive bans new electrical and electronic equipment
containing more than permissible levels of hazardous substances on the EU market after July 1, 2006. Since
then, other countries have adopted the RoHS directive. Garmin has expended considerable effort and
resources to ensure compliance with the directive, although not all of its products are RoHS compliant. 15


Although China is a large potential market for GPS makers, there were questions as to the state of their
infrastructure in 2007. In an article found in the EETimes Asia, there was a lack of an industrial standard and
supervision for GPS operations in China. Since that time, China has made significant strides to address the
infrastructure shortcomings. China and the EU have joined forces to work toward Information and
Communications Technologies (ICT) standards. 16

                          Source: Cellular News, July 12th, 2009

Of additional concern, the US Air Force is seeking comments from receiver manufacturers regarding an SVN-
49 signal anomaly that is causing signal distortions. This involves the GPS IIR-20(M) spacecraft launched in
early 2009, but not yet operational. Due to the number of manufacturers, it is impossible for the Air Force to
work through this matter on their own. This highlights a vulnerability of Garmin’s product, as it is completely
dependent upon properly functioning satellites. These anomalies could impact service levels, and brand
confidence would be significantly affected. 17

                                                                                           An Analysis of GARMIN – Team Synergy -- 8

    Core competency of Garmin is its ability to leverage GPS technologies and in-house manufacturing
      to create trendy but useful products for high growth markets.
    Provides efficient after sales services and superior customer support in areas like repairs, technical
      support and warranties services.
    Manufacturing their products in-house reduces mishaps and ensures quality products.
    The company owns its manufacturing facilities in Taiwan and receives tax incentives from the
      Taiwanese government slated to end in 2011. Cheap labor allows the company to keep its operating
      costs low.
    Garmin produces quality products that are ISO certified and further approved for use in aviation by
      the FAA.

   GPS devices (inherent product weakness) are accurate to within 15 meters and certain atmospheric
     and weather factors may affect their accuracy. This has allowed competitors like NavSync Ltd and
     Ekahau Inc. to differentiate their products. These companies have developed Wi-Fi-based Real Time
     Location Systems that boost GPS accuracy and have created new products like NavTrac Wi-Fi-
     enabled GPS devices that support asset and inventory tracking from inside buildings to around the
   GPS satellites are monitored and controlled by the U.S Department of Defense, potentially limiting
     sales to certain clients (i.e. foreign governments).
   Endures a low sales cycle during the first half of the year versus the latter half of the year as
     consumers plan annual trips and marine activity.
   Owning manufacturing facilities and their related costs can be considered a weakness when sales
     volumes decline.

    A brand awareness drive to increase visibility in the world, in Europe they sponsored the English
      Premier League football club at Middlesbrough and “Garmin-Slipstream” cycling team.
    The use of GPS technology within varying age groups is rising and there are increased opportunities
      to provide cutting-edge applications of the technology.
    The need for all-in-one devices and the shift by most electronic and manufacturing companies
      toward consolidated products and applications provides continued opportunity.
    Garmin could capitalize/invest in the technology of applications such as Google-Maps such as street-
      level images and specialty routing options.

    Increase of new entrants offering personal navigation devices consolidated into mobile devices like
      the iPhone and Blackberry.
    GPS satellites may become inoperable due to decaying gravity; over time, they will be pulled into
      Earth’s atmosphere.
    There is a risk of market saturation of GPS devices because of their long life cycles and usability,
      hence reducing non-recurring sales/revenues coming to the company.

                                                                    An Analysis of GARMIN – Team Synergy -- 9


Garmin’s target markets are currently broken down into four main segments:

     1. Automotive/mobile

     2. Outdoor/fitness

     3. Marine

     4. Aviation
Source: GARMIN-LTD-10K-Annual-Reports-20090225


     1. Mobile cellular device owners, through the company’s new Nüvifone

     2. Car owners without in-built GPS systems in their cars.

     3. Nature and trail tracking enthusiasts, including joggers.

     4. Auto rental companies, to provide GPS devices as an option to their fleet of cars, for example
        Enterprise and Budget car rental companies.

     5. Resell companies that buy in bulk and resell their products i.e. Best Buy and Wal-Mart.

     6. Auto companies like Toyota and Ford that offer the product in their cars.

     7. Marine enthusiasts and for navigating Oceans, lakes and rivers.

     8. Aviation industry for air planes through aircraft companies like Raytheon and Cessna.

                                                                    An Analysis of GARMIN – Team Synergy -- 10
  (Measurement scale: Very Weak, Weak, Medium, Strong and Very Strong)


Garmin’s primary competitor is TomTom with 25% market share; Garmin holds 50% ( of
the Personal Navigation Device market (PND) including GPS consumer products for automotive
navigation. They also have stiff competition from their aviation-centered products from L-3 Avionics
Systems and Rockwell Collins. Another source of rivalry is the mobile industry that has incorporated low
cost GPS navigation services into mobile phones and PDA’s using 3G, EDGE and wireless internet
technology as a base to download interactive maps. The iPhone and Blackberry are the strongest
competition in regards to their personal GPS navigation line as GPS devices have proliferated the
market. Garmin has swiftly replied to this threat by releasing the nüvifone with downloaded maps.


Garmin is at the forefront of providing directional information. The only substitute to the GPS navigation
system offered by Garmin are maps that are periodically updated, printed and sold in local book and
corner stores. Another option to obtain directional information is the use of online map and locations
services such as Google Maps and MapQuest, which allow you to route a journey, print it, and follow the
provided directions to your final destination.

The threat of substitutes is weak is because the GPS based technology has been bundled with features
like route mappings, frequently updated maps, voice turn-by-turn command and location based services
(i.e. gas stations, weather information, traffic and entertainment information). These bundled services
give Garmin an edge and give consumers greater benefit.

SUPPLIER POWER- Strong for data supplier and Weak for manufacturing

Garmin has a single supplier Navteq for its data to digital mapping services. There is only one other
possible supplier (Tele Atlas NV) for the same services but were outbidded by rival TomTom for their
services thus making Navteq a powerful supplier as bundled services are what create the added value to
Garmin products. The same is true in regards to a strong supplier power when it comes to SiRF
Technology Holdings, Inc. who as of 2005 provides an architecture on which Garmin devices are built.
(SiRF Architecture.)

In respect to suppliers for product components, Garmin has a select number of suppliers that
individually provide sub components to their factories. The individual and separate suppliers with whom
Garmin has arrangements for component supplies have little power.

                                                                An Analysis of GARMIN – Team Synergy -- 11

By the end of 2008, Best Buy accounted for 10% of Garmin’s total sales as per the 2008 Annual report. In
the U.S consumer product sales channeled through Garmin’s network of dealers and distributors.

Major retailers carrying Garmin products (Garmin, 2008 Annual Report):

       Best Buy—one of the largest U.S. and Canadian electronics retailers;
    —internet retailer;
       Costco—an international chain of membership warehouses that carry quality, brand name
       Halford’s—a large European retailer specializing in car parts and accessories;
       Petra—a large distributor who sells to such dealers as Costco and;
       Target— one of the nation’s largest general merchandise retailers;
       Wal-Mart—the world’s largest mass retailer; and
       Wynit—a large distributor who sells to such dealers as Radio Shack and

Garmin depends on their automotive/mobile segment for 70% of their revenues but because of the
maturing nature of this segment of their business, there is less growth. (Garmin, 2008 Annual report)


First-mover companies like Garmin and its competitors (i.e. “Cobra, Lowrance, Thales, Navman,
Raymarine, Mitac, TomTom, Honeywell, Dell, Hewlett-Packard, and PalmOne”), have invested heavily in
GPS technology-based infrastructure and have intellectual property rights protecting their businesses
making it difficult for new entrants. New entrants’ stake claim by creating add-on services sold either to
the GPS market competitors.

It is important to note that there is vigorous price competition among the competitors. Gone are the
days when TomTom and Garmin used to charge $500 for GPS navigation units. Garmin has gone down
to as much as $150 a unit and that does not include the cheaper bundled GPS models bundled with
mobile cellular devices that have recently hit the market in the last 1 ½ years.

The telecommunications industry is heavily regulated by the FCC, the same is true for the company’s
operations in Europe where they are subject to regulation and certification for each product they bring
to market. Thus, any loss in certification or delay in attaining these credentials may lead to loss of
market share.

                                                                 An Analysis of GARMIN – Team Synergy -- 12
Financial Ratio Analysis Garmin Ltd (GRMN)

Garmin had fantastic growth year in FY07 in which it grew revenues 79%. In FY08, however Garmin has
grown revenue to $3.5B at a conservative 9% rate. FY08 was a challenging year for Garmin which saw its
profits rise slightly by 6% behind the 9% revenue growth but this was misleading because its net income fell
significantly as a percentage of revenue by 3% due mainly to an increase in R&D, SG&A and COGS. Net
Income fell to $732 million from $855 million in FY07.

Garmin has outperformed the S&P500 on profit margin but is only slightly trailing the industry by 1%. Total
Profit margin for FY08 was 22% but decreased 5% from FY07. Return on Assets has declined 1% and Return
on Equity declined 3% to 33% from 36%. Clearly, high expectations and slowing economy have had an
impact on Garmin’s capability to maintain this level of performance.

Garmin has apparently not become more efficient because of its growth as evident by its declining operating
income and a decrease in inventory turnover.). Inventory as a percentage of revenue has grown significantly
which may either be a temporary condition due to the slowing economy and missed forecasts or a lesser
efficient model. The Quick Ratio or “acid test” of Garmin’s financial health shows that Garmin has 3.8 times
assets in short-term investments (cash flow, A/R and short-term investments) versus liability. Cost of Sales
rose to 55% as a percentage of revenue, which is up 2% from FY07. Likewise, R&D rose .9% to 5.9% as a
percentage of revenue and SG&A rose 1% to 13% as a percentage of revenue.

If we compare Garmin’s liquidity to TomTom NV a $2.3B competitor, we find that TomTom carries much
more debt and risk with a Current Ratio of .35. This means that TomTom carries .35 cents in assets for every
$1 in liability compared to Garmin, which carries $4 of assets to $1 liability. If Garmin were able to increase
its inventory turnover even further and maximize its use of cash store it may be able to put more pressure
on a struggling competitor like TomTom with either a leveraged buy-out or increasing pricing pressure.

One area the company has improved upon is in decreasing the average days of A/R by reducing a total of 38
days by moving A/R from 121 days to 83 days. The potential use of this cash was offset by the increase in

Garmin is healthy financially although less efficient over the last 2 years. The current equity return and profit
margin is above the S&P 500 average however, Garmin has to deal with managing costs as a percentage of
revenue. Garmin carries almost no risk to solvency and its ability to cover its liabilities as the Current Ratio
shows it has more than 4.5 times assets to liabilities. Garmin carries no debt. Many investors can construe
this as a lack of innovation, efficient use of capital, vision and capacity for expansion. Garmin’s growth trend
has slowed significantly and it will need to become more efficient and expand its revenue base either
through a better use of cash or a reduction of inventory for a better return on capital.

See Appendix for financial statements and charts.

                                                                      An Analysis of GARMIN – Team Synergy -- 13
Critical Success Factors

1. Leverage use of cash and control expenses

        Garmin has the strength afforded a company with significant assets and no long-term debt. Garmin
        could put price pressure on smaller competitors by becoming even more efficient with its own
        expenses and use of inventory and build up a stronger cash position in order to reduce prices or use
        the cash for purchase into a marketplace through its competitors or incentives to partners.

2. Diversify Product Line

        The popularity of smartphones and online mapping software is a risk to Garmin’s business model as
        there will be less desire to purchase stand-alone navigation devices. Garmin must either diversify its
        product line or find a new way to collaborate with auto and boat manufacturers. Of course, Garmin
        can continue to compete in the phone space or expand nüvifone partnerships. The risk is the
        margins of these businesses are typically much less and have greater competition.

        Garmin has sufficient cash to purchase its way into IP or diversify in the phone market or buyout a
        smaller competitor that has valuable IP such as TOMTOM.


Garmin Ltd is a financially healthy, market leading company that supplies navigational products which finds
itself in 2010 on the verge of a paradigm shift. If Garmin wishes to remain a market leader in the years to
come, it should leverage its assets and capability to diversify and re-examine how it delivers these services
and respond to a very real market shift as consumers embrace alternative platforms.

                                                                     An Analysis of GARMIN – Team Synergy -- 14
    Income Statement Garmin Ltd (GRMN) in thousands U.S. Dollars

                              PERIOD ENDING                                                  27-Dec-08      29-Dec-07   30-Dec-06

                             Total Revenue                                                   3,494,077      3,180,319   1,774,000

                             Cost of Revenue                                                 1,940,562      1,717,064    891,614

                               Gross Profit                                                  1,553,515      1,463,255    882,386

                                                                    Operating Expenses

                             Research Development                                                 206,109    159,406     113,314

                        Selling General and Administrative                                        485,389    396,498     214,513

                                 Non Recurring                                                          -           -           -

                                     Others                                                             -           -           -

                            Total Operating Expenses                                                    -           -           -

                        Operating Income or Loss                                                  862,017    907,351     554,559

                                                             Income from Continuing Operations

                        Total Other Income/Expenses Net                                            52,956     71,129      40,036

                        Earnings Before Interest And Taxes                                        914,973    978,480     594,595

                                Interest Expense                                                     607         207          41

                               Income Before Tax                                                  914,366    978,273     594,554

                               Income Tax Expense                                                 181,518    123,262      80,431

                                Minority Interest                                                       -           -           -

                        Net Income From Continuing Ops                                            732,848    855,011     514,123

                                                                   Non-recurring Events

                            Discontinued Operations                                                     -           -           -

                               Extraordinary Items                                                      -           -           -

                          Effect Of Accounting Changes                                                  -           -           -

                                   Other Items                                                          -           -           -

                               Net Income                                                         732,848    855,011     514,123

                  Preferred Stock And Other Adjustments                                                 -           -           -

                 Net Income Applicable To Common Shares                                          $732,848   $855,011    $514,123


Balance Sheet Garmin Ltd (GRMN)
                                       27-Dec-08       29-Dec-07           30-Dec-06

Current Assets

Cash And Cash Equivalents                              696,335     707,689             337,321

Short Term Investments                                 12,886      37,551              73,033

Net Receivables                                        791,146     1,059,889           459,520

Inventory                                              425,312     505,467             271,008

Other Current Assets                                   58,746      22,179              28,202

Total Current Assets                                   1,984,425   2,332,775           1,169,084

Long Term Investments                                  262,009     386,954             407,843

Property Plant and Equipment                           445,252     374,147             250,988
Goodwill                                               -           -                   -

Intangible Assets                                      230,954     196,030             67,580

Accumulated Amortization                               -           -                   -

Other Assets                                           1,941       1,554               1,525

Deferred Long Term Asset Charges                       -           -                   -

Total Assets                                           2,924,581   3,291,460           1,897,020
Current Liabilities

 Accounts Payable                                      479,176             801,883                 337,682

 Short/Current Long Term Debt                          -                   -                       -

 Other Current Liabilities                             -                   -                       -

Total Current Liabilities                              479,176         801,883                 337,682

Long Term Debt                                         -               -                       248

Other Liabilities                                      215,481         127,028                 -

Deferred Long Term Liability Charges                   4,070           11,935                  1,191

Minority Interest                                      -               -                       -

Negative Goodwill                                      -               -                       -

Total Liabilities                                      698,727             940,846                 339,121

Misc Stocks Options Warrants                       -                   -                       -

Redeemable Preferred Stock                         -                   -                       -

Preferred Stock                                    -               -                       -

Common Stock                                       1,002           1,086                   1,082

Retained Earnings                                  2,262,503       2,171,134               1,478,654

Treasury Stock                                     -               -                       -

Capital Surplus                                    -               132,264                 83,438

Other Stockholder Equity                           (37,651)        46,130                  (5,275)

Total Stockholder Equity                           2,225,854           2,350,614               1,557,899

Net Tangible Assets                                $1,994,900          $2,154,584              $1,490,319

Cash Flow Garmin Ltd (GRMN)

                               PERIOD ENDING                                                     27-Dec-08    29-Dec-07   30-Dec-06

                                Net Income                                                         732,848     855,011     514,123

                                             Operating Activities, Cash Flows Provided By or Used In

                               Depreciation                                                         78,417      64,037      44,475

                        Adjustments To Net Income                                                  111,702      (2,554)     (3,076)

                     Changes In Accounts Receivables                                               206,101    (477,108)   (230,111)

                           Changes In Liabilities                                                (330,294)     484,238     136,459

                          Changes In Inventories                                                    83,035    (224,180)    (95,658)

                   Changes In Other Operating Activities                                           (19,645)    (17,356)     (4,357)

                 Total Cash Flow From Operating Activities                                         862,164     682,088     361,855

                                               Investing Activities, Cash Flows Provided By or Used In

                           Capital Expenditures                                                  (119,623)    (156,777)    (92,906)

                               Investments                                                         130,744     112,775     (93,772)

                 Other Cashflows from Investing Activities                                         (67,470)   (131,693)    (39,707)

                 Total Cash Flows From Investing Activities                                       (56,349)    (175,695)   (226,385)

                                               Financing Activities, Cash Flows Provided By or Used In

                              Dividends Paid                                                     (150,251)    (162,531)   (107,923)

                           Sale Purchase of Stock                                                (659,943)        9,228    (34,376)

                              Net Borrowings                                                              -       (248)        (11)

                 Other Cash Flows from Financing Activities                                          2,143      17,434        9,660

                Total Cash Flows From Financing Activities                                       (808,051)    (136,117)   (132,650)

                     Effect Of Exchange Rate Changes                                                (9,118)         92         149

                   Change In Cash and Cash Equivalents                                           ($11,354)    $370,368      $2,969

Other Financials

Growth Rates %                        Company Industry S&P 500
Sales (Qtr vs year ago qtr)            -26.60      -12.60         -9.10
Net Income (YTD vs YTD)                -47.90      -10.50         -5.00
Net Income (Qtr vs year ago qtr)       -36.80      -38.60         -11.30
Sales (5-Year Annual Avg.)             43.56       23.69          13.14
Net Income (5-Year Annual Avg.)        32.62       18.72          12.74
Dividends (5-Year Annual Avg.)         24.57        3.18          11.70

Profit Margins %                      Company Industry S&P 500
Gross Margin                            45.1        46.8           38.1
Pre-Tax Margin                          22.3         0.9           10.4
Net Profit Margin                       17.8         5.1            7.1
5Yr Gross Margin (5-Year Avg.)          47.3        46.6           37.8
5Yr PreTax Margin (5-Year Avg.)         30.4        11.2           16.5
5Yr Net Profit Margin (5-Year Avg.)     25.6         8.5           11.5

Financial Condition       Company        Industry           S&P 500
Debt/Equity Ratio             0.00         0.40              1.39
Current Ratio                  4.5          3.3               1.5
Quick Ratio                    3.8          2.5               1.2
Interest Coverage             21.4         61.6              23.4
Leverage Ratio                 1.3          1.9               5.2

Book Value/Share              12.28        20.33             21.10

Investment Returns %                  Company         Industry             S&P 500
Return On Equity                         22.6              9.7              15.7
Return On Assets                         17.2              5.1               5.9
Return On Capital                        20.9              6.4               8.2
Return On Equity (5-Year Avg.)           35.0              14.8             19.1
Return On Assets (5-Year Avg.)           27.4              7.8               7.9
Return On Capital (5-Year Avg.)          33.8              10.0             10.6
Management Efficiency                 Company         Industry             S&P 500
Income/Employee                         60,469         19,667              56,806
Revenue/Employee                       339,059        280,441              846,884
Receivable Turnover                      5.0               5.7              13.1
Inventory Turnover                       3.4               4.1               9.4
Asset Turnover                           1.0               0.7               0.8

Corporate Overview Sources:
       Garmin Company: About Us (2009).
     Retrieved September 25, 2009, from Garmin Website:
       Garmin Culture: Stories from the Inside (2009).
     Retrieved September 25, 2009, from Garmin Website:
       Wikipedia - The Free Encyclopedia: Garmin (Sept 18, 2009).
     Retrieved September 25, 2009, from Wikipedia Website:
       Wichita Business Journal: Report: Garmin smartphone will cost $500 (Sept 22, 2009).
     Retrieved September 25, 2009, from Wichita Business Journal Website:
       Wall Street Journal: Garmin Tried to Find Ways Around Smartphone Threat (Sept 22, 2009).
     By Ben Charney; Retrieved September 25, 2009, from Wichita Business Journal Website:

Technological Innovations & Marketing Strategy Sources:
         Becky H. GPS brownout unlikely. Colorado Springs Business Journal (CO). n.d.;Available from: Regional Business News,
         Ipswich, MA. Accessed September 25, 2009.
         Bertolucci J. Let a GPS Be Your Trail Guide. Kiplinger's Personal Finance. August 2009;63(8):p70.
         Event Brief of Q2 2009 Garmin Ltd. Earnings Conference Call - Final. Fair Disclosure Wire (Quarterly Earnings Reports).
         Garmin Signals The Worst Is Past. Wall Street Journal - Eastern Edition, August 6, 2009:pB5.
         Kiley D. THE RIGHT DIRECTION. BusinessWeek. September 28, 2009;(4148):p75.
         Mott G. Golf & GPS Technology. Cigar Aficionado. September 2009;17(6):pp81-85. Available from: Business Source Premier,
         Ipswich, MA. Accessed October 1, 2009.
         Norman J. Garmin Changes Strategy to Focus on Specialty Bike Channel. Bicycle Retailer & Industry News. April 15,

PEST Analysis Sources:
       Garmin Tries To Find Ways Around Smartphone Threat >GRMN (September 21, 2009)
     By Ben Charney; Retrieved September 25, 2009, from Wichita Business Journal Website:
        Wikipedia - The Free Encyclopedia: Global Navigation Satellite System (Sept 18, 2009).
     Retrieved September 25, 2009, from Wikipedia Website:
     3, 4
          Wikipedia - The Free Encyclopedia: Global Navigation Satellite System (September 19, 2009).
     Retrieved September 25, 2009, from Wikipedia Website:
       2008 National Trade Estimate Report on Foreign Trade Barriers – China (September 21, 2009)
     Released by US Trade Representative; Retrieved October 18, 2009, from government website:
       2008 National Trade Estimate Report on Foreign Trade Barriers – European Union (September 21, 2009)
     Released by US Trade Representative; Retrieved October 18, 2009, from government website:
       2008 National Trade Estimate Report on Foreign Trade Barriers – Canada (September 21, 2009)
     Released by US Trade Representative; Retrieved October 18, 2009, from government website:
       GPS Enabled Handsets Expected Bypass Economic Downturn (January 23, 2009)
     GPS World Magazine; Retrieved September 23, 2009, from GPS World website:

      Economy in U.S. Shrank 0.7%, Less Than Anticipated (January 30, 2009)
     By Shobhana Chandra; Retrieved September 25, 2009, from Bloomberg website:
        Eurpoean Economy Contracts More Than Estimated (July 30, 2009)
     By Simone Meier; Retrieved September 25, 2009, from Bloomberg website:
        Chinese Economy May Be Headed Into an Iceberg (July 30, 2009)
     By Anna Fedec; Retrieved September 23, 2009, from Trading Economics website:
        Garmin Hit By The Tax Man (April 30, 2008)
     By Carl Gutierrez; Retrieved October 18, 2009, from Forbes website:
        Mobile navigation subscribers increase two-fold to reach 28 million (October 11, 2009)
     Telecom Tiger Magazine; Retrieved September 24, 2009, from TelecomTiger website:
        Sendng GPS Devices the Way of the Tape Deck (July 7, 2009)
     By Jenna Wortham; Retrieved September 26, 2009, from New York TImes website:
        Garmin Company: Product Design (2009).
     Retrieved October 18, 2009, from Garmin Website:
        The Need to Redirect China’s GPS Market (September 24, 2007).
     Retrieved September 24, 2009, from Garmin Website:
       Air Force Polls Receiver Makers for Solutions to Satellite Problems (June 30, 2009).
     GPS World Magazine; Retrieved September 26, 2009, from GPS World Website:

SWOT Analysis Sources
  Garmin Tries To Find Ways Around Smartphone Threat (September 21 2009)
  By Ben Charny; Retrieved September 25 2009 , from The Wall Street Journal :
  New NavTrac Wi-Fi-enabled GPS Devices Support Asset and Inventory Tracking … (April 27, 2009)
  By Ekahau Inc.; Retrieved October 19, 2009, from Industrial Embeded Systems website:
  US says GPS satellite coverage may fail soon (May 16, 2009)
  By J. Mark Lytle; Retrieved September 23, 2009, from TechRada: SATNAV News website:
  Garmin to sponsor well known UK football club Middlesbrough (Jul 23 2007)
  By Ludovic Privat; Retrieved September 23, 2009 from GPS Business News,
  Garmin in a Good Position (April 17, 2007)
  By Katy Marquardt; Retrieved Sep 23 2009, from website:
  Garmin Company: Investor information;
  Retrieved September 25, 2009, from Garmin website:

Competitive Analysis Sources:
   Setting a New Course (November 7, 2007)
   By Daniel McGinn; Retrieved October 4, 2009, from News Week Article:
   Garmin hits iPhone directly with Nüvifone (January 30, 2009)
   Retrieved October 8, 2009, from Electronista website:üviphone/
   Garmin Limited (NASDAQ: GRMN)
   Retrieved October 4, 2009, from website:
   GPS Devices and Systems Will Generate Revenues of $240 Billion by 2013 (April 28, 2009)
   Retrieved October 7, 2009, from ABIresearch website:
   Who Keeps Digital Maps Going in The Right Direction? (January 14, 2009)
   By Amol Sharma; Retrieved October 10, 2009, from The Wall Street Journal website:
   Garmin Company: Garmin Chooses SiRF as Supplier on Selected New Garmin Devices (August 30, 2005)
   Retrieved October 11, 2008, from Garmin Press Release:
   Garmin company: 10-K 2008 Filing
   Retrieved October 11, 2009, from Garmin company website:

Critical Success Factors Sources
        MSN Money. (2009, 10 6). Retrieved from
        Press, A. (2009, September 9). Retrieved from The Wall Street
         Journal Online.


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